KANSAS REALTORS FIGHT PLAN TO END STATE INCOME TAX

Opposition grows to eliminating deduction for homeowners

Brian Jones has been an admirer of Republican Sam Brownback’s fiscal conservatism going back to Brownback’s days as an anti-tax congressman in the 1990s. But now the real estate company owner from southeast Kansas finds himself fighting the governor’s plan for phasing out the state income tax.

Brownback has been lionized by the GOP right for trying to end the personal income tax, something not accomplished by any state in more than 30 years. In his two years in office, he has aimed to make Kansas a national testing ground for conservative theories about economic prosperity.

But the push, which he began with a 24 percent cut in the top rate, now depends on wiping out deductions claimed by more than 300,000 homeowners. He suddenly confronts the conundrum that just because taxpayers want to get rid of taxes doesn’t mean they’re ready to give up favorite tax breaks.

The Kansas Association of Realtors spent $195,000 in January alone on ads against the idea, which the group charges would slam the industry as well as people eager to own their own homes.

The governor insists that everyone will save in the long run. But his latest tax proposals are now stuck in the Republican-controlled Legislature, and some of his allies are worried they could be changed or, even worse, enacted in a way that would trigger drastic cuts to state programs, especially schools, potentially discrediting his vision.

“Going from a slow growth to a pro-growth state involves tax policy, and it’s difficult,” Brownback said recently.

Anti-tax crusader Grover Norquist said conservatives nationwide are avidly watching Brownback’s effort. “This is a completely new world,” he said.

Under Brownback’s tax plan, the lowest income tax bracket would gradually decline from 3.5 percent to 1.9 percent and the top rate from 6.45 percent to 3.5 percent. Rates would go to zero if the state economy grows as he expects. His administration projects at least several thousand new jobs a year and a boost in the state’s population by 35,000 by 2020.

But last year’s tax cut was so aggressive that big budget problems loom unless Kansas cushions the fiscal blow. In addition to rate reductions, it wiped out taxes on many small business owners entirely. Scrapping the two homeowner tax breaks, plus extending a sales tax that was scheduled to expire, would raise about $490 million of the $850 million in revenue subtracted.

The Legislature is feeling the backlash about the homeowner deductions. A Senate committee voted to preserve the deduction for home property taxes. The full Senate expects to consider more changes next week.

The governor’s administration contends that many homeowners would actually gain hundreds of dollars a year when the rate cuts are fully phased in. And that the state’s surging economic activity will make up the revenue from the rate cuts long term.